The money your business keeps tied up just to trade, worked out properly, including the two things the standard formula leaves out in India. Free Excel, works offline.
Eight figures in, one number out: what you must fund to trade at the size you trade at now. The textbook answer and the real answer are shown side by side so you can see exactly what the difference is made of.
Under the CGST Act the tax follows your invoice, not your customer's payment. Sell on sixty-day terms and you carry that money for sixty days, the same way unbilled revenue ties up value before it reaches the bank. This sheet sizes it separately, because it is the tax element of what your customers owe and you have already handed it over.
Most calculators treat everything you owe as free credit. Where a supplier is a registered micro or small enterprise the law gives you fifteen days unless you agreed longer in writing, so that half is separated out.
Stock days plus collection days less supplier credit, weighted across the two kinds of supplier. It also prices a single day, so you know what one day of faster collection is actually worth to you.
Your number against the minimum 20 per cent of turnover the Reserve Bank's FAQ records as the starting point for a limit, so you know whether you are asking for something ordinary.
Every rule with the section it comes from and the document it was read in, plus the figures we deliberately do not print and why.
A Surat distributor on ₹1.2 crore of sales, where the textbook answer and the real answer differ by three and a half lakh of tax already handed over.
Petpooja Invoice keeps billing and live inventory in one place and records every transaction, so the sales and stock figures this calculator asks for come out of your books rather than an estimate.
Explore Petpooja InvoiceWorking capital is not a cost. It is the money that sits inside your business permanently while you keep operating: stock on a shelf, invoices with customers, minus whatever your suppliers let you owe. It never appears on a profit and loss account. It shows up on the balance sheet instead, as current assets against current liabilities, which is why profitable businesses are caught out by it.
The standard formula is stock plus receivables less payables. In India it understates the answer twice, and both errors push the same way.
The first is tax, and it is not something a cash flow statement will surface either, because that is prepared after the period. Under the CGST Act the time of supply on a credit sale is the invoice, not the payment. You raise the invoice, the liability is fixed, and the money arrives whenever the customer decides. On sixty-day terms you fund that tax for sixty days out of your own pocket. It is a real block of working capital and no formula that stops at stock and receivables will show it to you.
The second is supplier credit. The formula subtracts what you owe on the assumption you can take your time. Where the supplier is a registered micro or small enterprise you cannot. The MSMED Act gives you fifteen days from acceptance unless you agreed longer in writing, and a written agreement can never take it past forty-five. Miss it and you owe compound interest, with monthly rests, at three times the RBI bank rate, which is not deductible when computing income. Treating that half of your buying as elastic is how a funding plan quietly fails.
It also sits behind the numbers in a break-even calculation: the volume that makes you profitable still has to be funded while it converts into cash. Put both corrections in and the number goes up. That is the point: it is better to know the real figure before a season turns than to discover it when a payment is due. If your weekly cash flow forecast keeps showing the same shortfall month after month, the problem is not timing. It is this.
The calculator ends where a lender begins. The Reserve Bank's FAQ records the Nayak Committee position that working capital limits for small units are computed on a minimum of 20 per cent of estimated turnover, up to a credit limit of ₹5 crore. Knowing whether your requirement sits inside or outside that is the difference between an ordinary conversation and one you have to justify.
A distributor in Surat: ₹1.2 crore of sales, 18 per cent GST, 40 per cent of buying from micro and small suppliers. Every figure below is computed in the file:
How long you have to pay a micro or small enterprise when nothing is agreed in writing. A written agreement can extend it but never past forty-five days, so forty-five is a ceiling rather than the default it is usually taken for.
Source: MSMED Act 2006, sections 2(b) and 15The minimum share of estimated turnover a bank works to when computing a working capital limit for a small unit, applying up to a credit limit of ₹5 crore. Banks are separately advised to appraise the genuine requirement behind it.
Source: RBI, FAQs on Micro, Small and Medium EnterprisesWhen your GST liability is fixed on a credit sale, not the date the customer pays. Everything between the two is working capital you provide, and it appears in no standard formula.
Source: CGST Act 2017, sections 12(2) and 13(2)The formula subtracts everything you owe. Where the supplier is a registered micro or small enterprise the period is fifteen days unless you agreed longer in writing, so that credit is worth far less than it looks.
The tax follows the invoice; the money follows the customer. On sixty-day terms you fund your own output tax for sixty days, and no calculation that stops at stock and receivables will tell you.
A holding period from someone else's business will not fund yours, and the way stock actually behaves in a store rarely matches an average. Measure stock days and collection days from your own ledger, even roughly. It is the single input that changes the answer most.
Working capital scales with turnover. Growing thirty per cent means funding roughly thirty per cent more of it, which is why fast-growing businesses run out of money while profitable, whatever their profit margin says. Plan the funding alongside the growth, in your projections.
A one-off shortfall is timing. The same shortfall every month is structural, and no amount of rescheduling payments will fix it. The two need different answers.
Twenty per cent of turnover is where a limit is computed from, not a promise of sanction. Banks are advised to appraise the genuine requirement, which means showing the cycle behind your number.
Because the cycle is a number of days, cutting a day off it releases roughly one day of trading value. Money released that way carries no interest, unlike the same amount borrowed.
| Aspect | Stock + receivables − payables | With this calculator |
|---|---|---|
| GST you fund before collection | Not counted at all | Sized separately and added |
| Supplier credit | Treated as one elastic figure | Split into MSE and non-MSE, on different clocks |
| Holding periods | Usually an industry average | Your own measured days |
| Result on the worked example | ₹22,09,315 | ₹25,64,384 |
| Cycle in days | Rarely shown | Shown, and priced per day |
| Comparison to a lender | None | Against the minimum 20 per cent benchmark |
| What you can act on | A single number | The days behind it, which is what you change |
Swipe the table sideways to see the full comparison.
Eight figures in, one number out, with the cycle in days behind it.
Petpooja is India's leading SME business software suite, trusted by 1,50,000+ businesses across restaurants, retail, healthcare, manufacturing, and more. From billing and payroll to task management and procurement Petpooja helps Indian businesses run better, every day.
Petpooja Invoice raises GST invoices and keeps billing and live inventory in one place, recording every transaction, so the sales and stock numbers this calculator needs are the ones you actually billed.
